Build a Referral-Based Business (Part 3)
Word of mouth is great but how do you get more - a lot more?
Referrals are one of the most powerful lead generators in the world. We all know that referrals cost you very little and usually (if a good client has referred them) the new client is of relative good quality. Ask any business owner where the vast majority of new clients come from and they say "Word of Mouth" or "Referrals." The $64,000 question is "what systems do you have in place to make sure the referral happens?" Obviously, it helps to offer exceptional value and service; but this is only the foundation. Why not leverage your business from this firm foundation by building your system to generate referrals?
This month we are continuing our focus on steps to building referral systems in your business. Last month we discussed steps 4-6: Teach your customers why it is good for them to give you referrals; Thank your customers; and Give awesome service that creates delighted advocates. Here are the final three of the nine steps to building a referral based business...
Step 7. Be daring…ask people when they buy and people who don't buy.
Ask the question and you will always get the right answer. Sometimes it may take a few questions, but you will get there when you test the questions you use. I am still amazed at the number of people who simply don't ask for referrals when a prospect or customer's emotions are running high and they are the happiest to give a referral. Here are some tips to improve your effectiveness in asking for referrals when you make a sale.
o Asking for a referral without giving a reason to give them to you is a waste of your time.
o Ask for your referrals after you have "commitment" to the sale, yet before you have finalized details of the sale.
o Ask your customer why they decided to buy from you, then ask if they have any acquaintances who would buy for the same reason.
o Give them at least two valid reasons why they should give you the referral-such as special offers, pricing, or free service.
Asking people for referrals and getting a "no" response only means "no" right now, so leave yourself open to ask them again later on. Take the time to plan how you will ask and make sure you do it with every customer you deal with. And, before you ask anyone, go through this simple test. If you were the customer, would you pass your friend's information over to you right now? That answer may mean you have to change a few things to make sure they would want to refer!
Step 8. Make giving referrals a condition of doing business with you.
When you set up your business you make the rules for people doing business with you. If you really want to have a business that runs on just referrals then make it a rule-for people to do business with you they "have "to give you referrals. There are several ways to introduce this to your customers, but one thing you must do is establish it very clearly upfront.
o Introduce this rule through a set of commitment statements. These set out what you will do for your clients and what commitments you expect in return.
o Let your customers know this rule by telling them upfront before you make the sale.
o Create an audio tape/CD that explains how you work with customers.
o Only accept customers who are referred to you by current customers.
o Be really bold and communicate this message in your marketing materials.
Making referrals a condition of doing business with you generally means that you are giving awesome service, selling value rather than discount, and your customers are not competitors with each other.
Step 9. Reward your customers if they give you qualified referrals.
If you are going to buy new customers for your business (this is what you are doing when you spend money on marketing and advertising expenditures), why not buy them from your past customers? In other words, give your past and new customers some type of reward. There are many ways this can be done.
o Give them a discount on their next purchase
o Crediting their account when you make each sale.
o Send them a gift voucher for each referral. This voucher can be for your business, but an even better way is to use an alliance partner. For example, you own a high end boutique catering to women and you offer a $100 gift certificate to a salon or spa. You buy the certificates from the salon at $50 (their cost). Of course you offer the same arrangement to the salon owner.
Buying referrals is a better option than buying a new prospect through marketing since you can tell the people referred that one of their friends asked you to call them. One essential key here-Determine how much you want to spend on every new customer and your conversion rate. Then you will know how much discount to give and insure that you are investing in potential new customers wisely.
Conclusion
Referrals are one of the most powerful lead generators in the world. What systems do you have in place to make sure the referral happens? Utilize these nine steps to grow your business by leaps and bounds!
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